Douglas VT State of State Speech - Writely

Douglas VT State of State Speech - Writely:

Governor Douglas' State of the State speech is worth reading in total, but I'm focusing on just one aspect of his comprehensive set of proposals, the property tax driven by the costs of edcation.

I have often stated that Vermont cannot afford its appetites. By this I mean we cannot not afford the taxes that that result when well-meaning state legislators and local elected officials approve programs and budgets for what they consider to be desirable purposes.

Vermonters simply cannot and will not continue to pay taxes at ever increasing rates. Those who can will leave and those who can't will become increasing consumers of costly state services.

I wholeheartedly support Gov. Douglas' proposal to cap property taxes driven by the rapid escalation of property taxes. In the face of declining enrollments, this present course is simply not sustainable.

With budget caps, people will be required to make difficult, but necessary decisions about education budgets and programs. Priorities will come into sharper focus when the available dollars are constrained to the rate of inflation.

Vermont's experience under Act 60 simply has not provided a sustainable model for the cost and performance of the state's education system.

It's time for more drastic action and I call on our legislators to muster the courage to oppose the education lobby and enact this proposal.

Providing farmers with some tax relief is also a worthy goal if we can reign in the costs of education, but such relief should not happen independently of cost controls.


"But too often, the sage advice of our native son has not been observed, and today Coolidge's Vermont has the nation's third highest tax burden as a percent of personal income. This is one area where Vermont should not be proud to be a national leader.

If we are to make Vermont a more affordable state, the problem of over-taxation cannot be ignored and must not be exacerbated. Not too many years ago, we heard the impassioned promises that Act 60 would reduce property taxes. The forecasts portrayed a future of responsible and moderate growth, of sustainable spending spread equitably across all Vermont towns.

Tomorrow is now today and the reality is that education spending has grown at almost twice the rate of inflation, outstripped increases in the gross state product and far outpaced growth in the family checkbook. The average increase has been over 6 percent per year - nearly 60 percent overall growth since 1999.

Property tax burdens have multiplied to keep up with spending. Since 1999, property taxes have risen, on average, at a rate of almost 8 percent per year. Put another way, taxpayers will pay $407 million more in property taxes in 2007 than they paid in 1999 - a spike of nearly 82 percent in eight years. Even with the help of Act 68, if left unabated, the average tax bill will jump over 10 percent from just this year to next.

However, over the same period, enrollment in our schools has dropped 8 percent. We'll have over 8,000 fewer students in September 2006 than we had in September 1999.
When enrollment is dropping, but spending is rising and taxes are soaring, we have a problem that requires immediate action.

If we expect to keep Vermont affordable for Vermonters, we must act now to drToday I am offering a comprehensive property tax relief plan for Vermont families to return sustainability to school spending, and give real power back to the local voters and school boards.

I am a firm believer in local control - but since Act 60 undermined that control, property taxes have spun out of control.

Some have offered a proposal to increase the state income tax to pay for education. Vermonters already pay some of the highest income taxes in the nation. Piling an education income tax on top of an already high income tax simply will not do for Vermont taxpayers. Moreover, raising the income tax does nothing to address the issue of higher spending.

As a matter of principle, taxes should not grow faster than your paycheck. So, I propose capping education property tax growth at no more than the rate of inflation each year. At roughly 3.5 percent, this target is sustainable and allows room for school budgets to grow responsibly to meet the needs of a community. If a town would like to spend more than the rate of inflation, my proposal will require a supermajority of 60 percent of the voters to pass the increase.

In addition, I propose a package of changes to restructure the income sensitivity program, including a measure to close loopholes in the prebate/rebate system - loopholes that allow owners of million-dollar homes to get five-figure prebate checks.

Combined with the return of the property tax surplus in the education fund, we will cut the statewide property tax rate by $.04 for all taxpayers. Further, with my relief plan, we can cut statewide rates by at least another $.10 in 2008 - that is almost $65 million in taxpayer savings in two years.

Act 60 eliminated the machinery and equipment property tax - giving businesses a property tax reduction on their fixed assets. However, because the key fixed asset of farmers is their land, our farmers could not enjoy this tax reduction. It is time to correct this double standard and repeal the education property tax on working farms by 2008. "